HCL Tech shares fall 3% after Q1 results. What Nomura, Motilal Oswal & other brokerages suggest now
Revenue from operations for the June quarter increased 13% YoY to Rs 34,579 crore, compared with Rs 30,349 crore in the corresponding quarter last year.
The company retained its FY27 constant currency guidance. It expects overall revenue growth of 1-4% YoY in constant currency, services revenue growth of 1.5-4.5%, and an EBIT margin of 17.5-18.5%.
HCL Tech share price: Buy, sell or hold?
Nomura maintained its ‘Buy’ rating on HCL Tech with a revised target price of Rs 1,290, implying an upside of around 6%. The brokerage said HCL Tech’s Q1FY27 revenue of $3.65 billion, which declined 0.5% QoQ but grew 2.6% YoY in constant currency terms, was ahead of its expectations.
HCL Tech also clarified that the over $1 billion mega deal signed in early July will see a meaningful ramp-up only in Q1FY28. Given unchanged macro conditions and continued weakness in two accounts, the company retained its guidance. Nomura expects the completed JasperSoft acquisition to contribute around $45 million to FY27 revenue and has marginally raised its FY27-28 revenue growth forecast to 3.1–5.3%, from 2–4.5% earlier. It also increased its FY27-28 EPS estimates by 2–3%, reflecting the Q1 performance and the acquisition.
Motilal Oswal retained its Buy rating on HCL Tech with a target price of Rs 1,450 (19% upside). The brokerage said both revenue and total contract value (TCV) exceeded expectations, while margins were largely in line with estimates. MOSL believes investments in Sarvam and the AI data centre strengthen HCL Tech’s long-term AI positioning and continues to view the company as its preferred large-cap IT pick.
Read more: HCLTech FY guidance stays muted despite $2.4 billion deal momentum
JM Financial maintained its ‘Reduce’ rating on the IT major with a revised target price of Rs 1,100, implying around 10% downside. The brokerage said both revenue and margins exceeded expectations, with services revenue declining 0.7% QoQ in constant currency against its estimate of a 1.5% decline, while services EBIT margin came in at 16.7%, above its 16.3% estimate.
Also read: HCLTech to invest Rs 3,500 crore in data centre business
JM Financial said the healthy order book provides some comfort, prompting it to raise its target valuation multiple to 15x from 14x. It also marginally revised its FY27-29 earnings estimates and increased its target price to Rs 1,100 from Rs 1,020. However, it noted that the stock trades at 16x FY28E consensus EPS, a 17% premium to Infosys despite a similar organic growth profile.
Emkay maintained its Add rating with a target price of Rs 1,250 against the current market price of Rs 1,221. The brokerage noted that revenue declined 0.5% QoQ in constant currency due to seasonal weakness, while EBIT margin improved 40 basis points to 16.9%. It highlighted strong net new deal bookings of $2.4 billion, retention of FY27 revenue growth guidance at 1-4% in constant currency terms, and a 10.6% sequential rise in advanced AI revenue to $171 million. It also viewed the planned investment of up to Rs 3,500 crore in a 50 MW AI data centre as a positive long-term step.
Nuvama retained its Hold rating on HCL Tech while lowering the target price to Rs 1,300 (6.5% upside) from Rs 1,400. The brokerage described the June quarter as good but said the overall outlook remains guarded.
360 One maintained its ‘Hold’ rating on HCL Tech and raised its target price to Rs 1,200 from Rs 1,180. The brokerage believes the company’s relatively stronger growth profile should continue to justify a valuation premium of around 15% over its larger peers. It added that while HCL Tech’s portfolio is better positioned to withstand pricing pressure, broader industry headwinds are likely to limit meaningful near-term growth. The brokerage has factored in an EPS CAGR of 11.4% over FY26-28 and values the stock at 15x FY28E EPS.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
